International Bailouts, Moral Hazard, and Conditionality

By Olivier Jeanne, Jeromin Zettelmeyer. Social Science Research Network, 2001

141 citations recorded by the source corpus.

The large international bailouts of the 1990s have been criticized for different reasons, in particular for generating moral hazard at the expense of the global taxpayer. We argue in this paper that some of these concerns are exaggerated or misleading because international bailouts have no or very little cost to the international community and the global taxpayer. The problem, in our view, is rather to ensure that the international safety net is not used as an input into bad domestic policies. This may require a shift towards ex ante conditionality, in the sense that the availability and size of official crisis lending need to be conditional on government policies before the crisis.

Subfields: Finance

View Paper: https://www.semanticscholar.org/paper/ed478a6e59366431fbd07352d83d943d4203a4ed

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1. Michael B. Hawes
2. Lawrence Broz
3. Jeffrey M. Chwieroth

Citations in the corpus

• Recovery Before Redemption: A Theory of Delays in Sovereign Debt Renegotiations (2009, unknown): “[18] Jeanne, Olivier and Jeromin Zettelmeyer.”
• Congressional Politics of Financing the International Monetary Fund (2006, background): “…banks should have little problem organizing for political purposes+ We 25+ See Bulow and Rogoff 1990; and Rogoff 1999+ 26+ See Dell’Ariccia, Schnabel, and Zettelmeyer 2002; Jeanne and Zettelmeyer 2001; and Dreher and Vaubel 2004+ 27+ Address by Anne Krueger, given at the National Economists’ Club…”